ASX 200 Forecast: ASX 200 Shows Signs of Exhaustion

• The ASX 200 looks very exhausting at this point in time in my daily analysis, as I believe this asset remains positive, but at the same time it may have overstretched its momentum.
• The AU$8000 level of course is an area that people will be paying close attention to as it is a large, round, psychologically significant figure, and therefore it would attract a lot of attention due to options traders as well.

Technical Analysis

The technical analysis in this pair is obviously very bullish, and I think at this point in time we have a situation where the market is starting to get a little exhausted. This exhaustion could lead to a bit of a pullback, perhaps reaching down toward the AU$7900 level, where we had broken out from previously. In this environment, the market is likely to see a lot of “market memory” come into the picture, and therefore I think a lot of people will be looking to get involved based on “cheap contracts.”

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Keep in mind that the Australian index is highly influenced by commodities, as well as interest rates in that country. In general, I think this is a situation where we are also going to be paying close attention to the risk appetite out there, because lot of the major companies in Australia are highly sensitive to whether or not people are willing to stretch out on the risk spectrum. Ultimately, this is a situation where traders continue to look at this through the prism of whether or not traders are willing to step out into Asia and the idea of growth.

Keep in mind that some of the biggest companies on the ASX 200 include BHP, Rio Tinto, and Fortesque. This is a situation where sometimes when copper or gold takes off to the upside, that can send this market to the upside. Furthermore, I think there are plenty of questions to be asked about the interest rate situation in Australia, as the Australian 10 year yield has been fairly robust. At this point, I think that buyers will step in on any pullback.

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